Australia NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Australia

Dividends from Indian companies are withheld at the non-resident rate before they reach you in Australia. Here's the treaty position and how to reclaim any excess.

When an Indian company pays you a dividend while you live in Australia, the company withholds tax at source before the money reaches you. India's default withholding on non-resident dividends is 20% under Section 393(2), the successor to Section 195. The India-Australia treaty position is more favourable, capping the rate at 15% for individual residents, a real saving over the 20% default (Article 10). To claim it you need Form 41, the successor to Form 10F, and a Tax Residency Certificate on file with the company or your broker.

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India-Australia key facts: dividend tax

Default non-resident TDS rate	20%
India-Australia DTAA treaty rate	15%
Your saving via the treaty	5%
Treaty article / basis	Article 10: 15% on Indian-listed dividends to Australian residents
Your TRC issuing authority	the Australian Taxation Office (ATO)

Rates reflect India's domestic withholding under Section 393(2) (Section 195 until 31 March 2026) and the India-Australia treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

Since the 2020 shift back to classical dividend taxation, dividends from Indian companies are taxable in the shareholder's hands and the company deducts TDS before paying. For a non-resident the default is 20% under Section 393(2) (Section 195 until 31 March 2026), plus surcharge and cess, and Section 115A taxes those dividends at 20% of the gross amount with no expenses allowed. A lower rate only ever comes from a treaty, and only where that treaty writes one for individuals: several of India's treaties reserve the reduced dividend rate for companies holding a large stake in the Indian payer, and some countries have no treaty with India at all, so portfolio investors there stay at the domestic rate.

Where a lower individual rate does apply, you claim it with Form 41 (formerly Form 10F) and a Tax Residency Certificate lodged with the company or broker, and any dividend withheld at the higher rate before your paperwork was on file is reclaimed through your Indian return. Where no lower rate applies, the 20% is generally your final Indian tax, so the questions worth asking are whether the payer withheld more than the correct rate and surcharge, and whether the country you live in gives you a credit for that Indian tax.

What changes because you live in Australia

Australian residents are taxed on worldwide income, so this Indian income also flows onto your ATO return, with a Foreign Income Tax Offset (FITO) crediting the Indian tax already paid against your Australian liability. The FITO is capped at the Australian tax that would have applied to that same Indian slice, so if your Indian withholding ran higher, the excess is wasted unless carried forward correctly. One trap most NRIs miss: assets held before you became an Australian resident get a deemed cost base reset to their AUD market value on your arrival day (s.855-45), so using the original rupee cost overstates the gain and overpays Australian tax.

Frequently asked questions

Common questions from Australian NRIs

India's default is 20% under Section 393(2), but the India-Australia treaty caps it at 15% for individual residents, a saving of 5%. To get the lower rate you file Form 41 with a Tax Residency Certificate from the Australian Taxation Office (ATO). Any excess withheld beforehand is reclaimed on your Indian return.

Yes. With Form 41 and a Tax Residency Certificate on file, the treaty rate of 15% applies instead of the 20% default, a 5% reduction. Dividends withheld at the higher rate before your paperwork was lodged are reclaimed when you file your Indian return.

Go further

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Dividend Tax sorted, by an Indian CA who works with Australian NRIs

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